There is lots of anger about Barclays’ highly dilutive £7.3 billion fundraising, which was announced on Friday. No-one likes surprises, particularly in the City, and Barclays dished it out in spades. Middle Eastern investors, who are stumping up £5.8 billion, will ultimately end up controlling 31% of the group.

Bear with me through this detail, because it needs to be explained. The bank is raising the cash through the issue of reserve capital instruments and mandatory convertible notes that can be converted into equity at a 23% discount to Barclays’ recent share prices. These instruments produce a coupon of 14% and 9.75%. UK investors baulked at the terms and that is what drove down the Barclays share price by 13% on Friday.

Barclays’ existing investors have every right to be annoyed. The opportunity for a life fund such as Scottish Widows to lock itself into a 14% coupon is mouth-wateringly attractive. Because of the need to raise capital swiftly and ahead of the fundraisings by Royal Bank of Scotland, HBOS and Lloyds TSB, John Varley, Barclays’ chief executive, has also ignored the pre-emption rights of investors — and that was never going to make him popular.

Despite the anger, I’d be surprised if the investors reject the deal on November 24 and here is why. They can’t afford to, as the uncertainty would kill the bank. That is why Varley eschewed a rights issue. He saw what happened at RBS and HBOS, where the share prices cratered.

And here is the rub for UK investors: they are no longer as important as they once where. Their pockets are not as deep and Barclays has gone to where the new wealth and economic power is. Varley and his board clearly believe the risk of alienating UK investors is worth taking. The option of taking government support was never on the agenda.

Varley wants a diversified investor base to reflects the group’s ambitions. That he paid more than he wanted for the new money reflects the fact that he was negotiating a fundraising in the most hostile financial conditions seen since the 1930s. The upside is that he has not been forced to go to government. Barclays wants economic freedom at all costs.

As a result, for the first time in a year, the Middle East appears to be on the right side of a deal. It has been handed more pups than Battersea dogs home from Wall Street bankers in recent months.

The big picture is a UK bank has been saved and the government will be delighted it has been done without recourse to semi-nationalisation. Second, this deal would not have been done without the support of the Abu Dhabi royal family. The Gulf emirate values its relationship with Britain and has backed it up with hard cash. It is no coincidence that the deal was completed ahead of Gordon Brown’s visit this weekend.

Barclays’ British investors are not concerned about that. They believe their rights have been violated and they will put the board on watch. With some 40% of the bank now in foreign ownership, their voice is no longer all that relevant. Barclays’ future lies outside Britain and its relationships and future business stream in China, Singapore, Japan and the Gulf are more important. British institutions do not have the chips to play in that league.

Numbers crunched

THEY are both numbers men who succeeded the boss after he bowed out on a high. Yet while Gordon Brown is thriving in the gravity of a recession, Ian Livingston at BT shows less surety of touch after a profit warning that drove the telecoms company’s shares below their 1984 flotation price.

It has only taken five months for what BT’s former chief executive, Ben Verwaayen, left behind to come unstuck.

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